Technical Analysis: NASDAQ Parallel Channel Triggers Sell

The NASDAQ fell sharply in the latest week as mega cap tech stocks saw a $1 trillion exit from investors. The rotation of capital primarily went to the Russell 2000 which has underperformed dramatically since 2021. Banks were a key recipient of money flow as the Regional Banking ETF (KRE) jumped nearly 20% on the week.

The fall in the NASDAQ is following a perfect parallel channel. In the chart above, investors can clearly see the lows and highs going back to the Covid 2020 bottom align perfectly within a channel. The NASDAQ hit the high end of the channel just over a week ago. Ever since then the NASDAQ has been in sell mode.

Based on the history of the parallel channel, the selling in the NASDAQ is likely not over. There will be bounces as buy-the-dippers will swoop in, but overally the technical analysis on the NASDAQ signals further downside.